Forecasting And Quotas Are A Waste Of Time!

If you are a senior manager at your company or are responsible for generating sales, forecasting is amongst the most time-consuming things you do. It is a David vs. Goliath task. Your management and investors ask for sales and revenue targets and how your marketing, business development, and sales teams are tracking against them.

In this case, your investors become Goliath, and you often feel helpless to provide information on the progress they seek. Remember, Malcolm Gladwell showed us that while Goliath appeared overwhelming, in the end, he was blind, and had so much armor on he could barely swing his sword. David was handy with a slingshot and took him out by staying far enough away from him not to feel the sword but close enough to take the fatal shot.

I think this is a good analogy as your investors are blind to the activities your teams are performing. The quarterly board meetings are the only time you get to discuss sales and revenue in any meaningful way. Your job as Goliath is to overcome the constant focus on trying to predict sales performance, and the ensuing revenue performance that comes after the deal. The slingshot here is to try to be open and honest about what your performance is as any attempt to sandbag or make the story overly hopeful will likely work against your credibility.

I am an activity based manager as I believe if I manage the activities well and fill the funnel the sheer number of deals will help us attain our sales goals. Large enterprise sales of technology rarely speed up with salesmanship or price reductions. The process is under the control of the buyer more than the seller, and the ability to accelerate the sale is nearly impossible. Converting sales to revenue is yet another drag as you are dependent on the rest of the company to build and deliver the product on time so revenue can be recognized.

I also don't believe in quotas for non-commodity based sales of technology. Quotas only create distance between management and the people who carry them. I prefer goals, so producers have something to strive for and measure.

Here is what famous investor and billionaire Mr. Buffett says from The Essay's Of Warren Buffett: Lessons for Corporate America.

"Charlie and I think it is both deceptive and dangerous for CEOs to predict growth rates for their companies.""Charlie and I not only don’t know today what our businesses will earn next year we don’t even know what they will earn next quarter. We are suspicious of those CEOs who regularly claim they do know the future and we become downright incredulous if they consistently reach their declared targets. Managers that always promise to “make the numbers” will at some point be tempted to make up the numbers."

The desire to create a Potemkin Village here is real and so many business management folks end up in the sales management graveyard due to their desire to paint a picture of a bright future when one doesn't exist. You all might remember the story of these Russian villages which were erected to impress Empress Catherine II on her journey along the Dnieper River to the Crimea. The fake portable villages were built and moved from place to place to impress her.

This is how it was in the late 1700's in Russia. Unfortunately, it is alive and well in sales management in 2016. In short, tell the truth to your management and investors. While the conversation might not be pleasant, it is far better than painting a picture of a rosy future when one doesn't exist. The time you buy for yourself will hurt the business and everyone associated with it. Here is how I feel about forecasting.

 The downside to missing your numbers or forecasting bad ones can be that you get fired. Is it so bad to be fired from a job that is impossible to do? Show me someone who can predict the future of enterprise sales and revenue, with accuracy over time, and I volunteer to work for her.

It becomes a question of how you rank your priorities. Successful people love their work and live with the cycles that come in business. They enjoy the challenge the unpredictable future holds for them.

It is dangerous terrain, but honesty and clarity win the day every time. Anything short of honest reporting will likely put you in the unenviable position of Icarus, who ignored his father Daedalus' advice and flew too close to the sun, lost his wings and crashed into the ocean.

My Best,